> For the complete documentation index, see [llms.txt](https://docs.garuda-defi.org/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.garuda-defi.org/garuda-vault-coming-soon.md).

# Garuda Vault (coming soon)

## What is Garuda Vault?

Garuda Vault provides liquidity for Garuda Perpetual. Liquidity providers (LPs) deposit supported assets into the vault, which acts as the counterparty to perpetual traders.

When traders make profits or losses, the vault's value changes accordingly. LPs share in the vault's trading performance based on their liquidity position.

## Providing Liquidity

LPs can deposit one or more supported assets into the vault. Each liquidity position is valued in USD at the time of deposit and tracked separately.

The value of an LP's position can change due to:

* Changes in the market price of the deposited asset.
* Profit or loss generated by perpetual trading.

## Supported Liquidity Assets <a href="#supported-liquidity-assets" id="supported-liquidity-assets"></a>

Garuda Vault currently supports:

* USDC.inj
* LUNC
* GRDX

LPs can deposit any of these assets into the corresponding vault.

### Risk Management <a href="#risk-management" id="risk-management"></a>

To help protect vault liquidity and manage market risk, Garuda Perps uses a dedicated [Risk Engine](/garuda-vault-coming-soon/risk-engine.md)

The Risk Engine continuously manages key risk parameters such as:

* [Liquidity utilization](/garuda-vault-coming-soon/risk-engine.md#reserve-factor)
* [Open Interest (OI) limits](/garuda-vault-coming-soon/risk-engine.md#open-interest-oi-cap)
* [Maximum position size](/garuda-vault-coming-soon/risk-engine.md#max-position-size)
* Liquidation and ADL mechanisms
* Market exposure and skew

These controls are designed to prevent excessive exposure and help maintain sufficient liquidity for traders and LPs.

## How LPs Earn <a href="#how-lps-earn" id="how-lps-earn"></a>

LPs can earn from perpetual trading activity.

When traders lose, the vault receives the corresponding value, increasing the value of LP liquidity.

When traders profit, the vault pays the trader, reducing the value of LP liquidity.

LP performance can also be affected by changes in the market price of the asset they provide.

### Profit & Loss Distribution

Vault P/L is calculated in USD, while each LP position is tracked separately according to its liquidity asset.

For example :&#x20;

* an LP providing GRDX receives their share of vault P/L in GRDX.&#x20;
* An LP providing LUNC receives their P/L in LUNC.

The amount of P/L allocated to each LP depends on the current value and ownership of their liquidity position.

### Withdraw Liquidity

LPs can withdraw their liquidity according to the current value of their position.

The withdrawal amount reflects :

> Deposited Asset Value ± Vault Trading P/L ± Asset Price Changes

#### ⚠️ Risks of Providing Liquidity

Providing liquidity involves risk. The value of your liquidity may decrease due to:

* Trading losses when perpetual traders make profits.
* Changes in asset prices such as LUNC or GRDX.
* Other risks associated with perpetual trading and smart contracts.

{% hint style="warning" %}
You may lose part or all of your deposited assets. Always understand the risks before providing liquidity.
{% endhint %}